Loan Agreement - Business - Alabama

BUSINESS LOAN AGREEMENT (ALABAMA)

This Business Loan Agreement is made as of [__/__/____] by:

• Lender: [________________________________]
• Lender address: [________________________________]
• Borrower: [________________________________]
• Borrower entity type and jurisdiction: [________________________________]
• Borrower address: [________________________________]

1. Transaction Gate

This form is intended for a documented business-purpose loan. Before execution, counsel should confirm:

• ☐ the original principal balance and all contemplated advances are accurately stated;
• ☐ whether Ala. Code § 8-8-5 applies, including its $2,000 original-principal threshold and any other applicable law;
• ☐ every direct and indirect charge incident to the loan is included in the lawful-rate analysis;
• ☐ the payment schedule and interest calculation reproduce the agreed economics without an undisclosed fee or compounding effect;
• ☐ the Borrower has approved the debt and any guaranty or collateral grant;
• ☐ any collateral is documented in a separate, asset-specific security agreement and perfection plan;
• ☐ licensing, disclosure, tax, sanctions, banking, consumer-purpose, agricultural, real-estate, and other transaction-specific laws have been screened; and
• ☐ the note, this Agreement, guaranties, and collateral documents use consistent debt, default, notice, and cure terms.

2. Loan Terms

• Loan type: ☐ term loan ☐ delayed-draw term loan ☐ other: [________________]
• Original principal balance: $[________________________________]
• Maximum commitment, if different: $[________________________________]
• Funding date: [__/__/____]
• Maturity date: [__/__/____]
• Business purpose: [________________________________]
• Disbursement account: [________________________________]

Subject to the Closing conditions, Lender shall fund the Loan and Borrower shall repay it under this Agreement and the promissory note attached as Exhibit A.

No revolving advance, automatic renewal, future advance, or additional facility exists unless Schedule 1 expressly describes it.

3. Interest and Charge Worksheet

3.1 Stated Interest

• Rate: [____]% per year / [reference rate plus spread: ________________________________]
• Rate-adjustment date and source: [________________________________]
• Day-count method: [actual/365, actual/360, or other: ________________________________]
• Compounding, if any: [________________________________]
• Default-rate increment, if any: [____] percentage points

3.2 Incident Charges

List every direct or indirect charge imposed as an incident to the Loan:

3.3 Alabama Interest Review

If the original principal balance is at least $2,000 and § 8-8-5 otherwise applies, the parties may agree to the interest rate subject to other applicable law, and all direct and indirect incident charges must be treated as interest for the analysis. If § 8-8-5 does not apply, § 8-8-1 generally states the rates for loans without and with a written rate, except as otherwise provided by law.

This Agreement contains no automatic “usury savings” reformation. Section 8-8-12 states the consequence for a usurious contract except as otherwise permitted by law. The parties shall correct the economics before signing rather than rely on a clause that purports to cure an unlawful rate after the fact.

4. Payments

Borrower shall pay principal and interest under this schedule:

All unpaid principal, accrued lawful interest, and other enforceable amounts are due on the Maturity Date.

Prepayment

• ☐ Borrower may prepay without premium after [____] business days' notice.
• ☐ A prepayment amount applies as stated here and included in the interest analysis: [________________________________].

Payments will be applied as follows, subject to applicable law: [________________________________].

5. Closing Conditions

Lender's duty to fund is conditioned on delivery of:

1. this signed Agreement and the Note;
2. evidence of Borrower's authorization and signer authority;
3. the completed schedules and disclosure list;
4. any guaranty expressly identified in Schedule 2;
5. if secured, the separate security agreement and completed perfection plan in Schedule 3;
6. insurance evidence expressly required by Schedule 4; and
7. payment of the disclosed Closing charges in Section 3.2.

Lender may waive a Closing condition only in a signed writing. A waiver does not add a fee, default, lien, guaranty, or other obligation.

6. Borrower Representations

Borrower represents on the funding date that:

1. its exact legal name, entity information, and signer authority are correctly stated in Schedule 5;
2. it has approved this Agreement, the Note, and each identified Loan Document;
3. the financial statements and other factual information delivered for underwriting are accurate in all material respects as of their stated dates, subject to the disclosures in Schedule 6;
4. Schedule 6 lists material pending written claims, judgments, defaults, liens, and debt known to Borrower that could affect repayment or the identified collateral;
5. the Loan proceeds will be used for the stated business purpose; and
6. no representation guarantees future revenue, solvency, value, or business success.

7. Borrower Covenants

Until final payment, Borrower shall:

1. use proceeds only for the stated business purpose;
2. deliver the financial reports listed in Schedule 7 by the stated dates;
3. maintain the records reasonably necessary to support those reports;
4. permit inspection of relevant records on reasonable notice during ordinary business hours, subject to confidentiality and third-party rights;
5. maintain the insurance expressly listed in Schedule 4;
6. give prompt written notice of a material payment default, material loss of collateral, material judgment, or another event specifically listed in Schedule 8; and
7. comply with the negotiated debt, lien, distribution, asset-sale, merger, and change-of-control limits in Schedule 8.

No covenant applies merely because it appeared in a lender's standard form; each restriction must be completed in Schedule 8 with a threshold, exception, and consent process.

8. Collateral, If Any

• ☐ Unsecured Loan. No collateral secures the Loan.
• ☐ Secured Loan. The collateral is granted only under the separate security agreement identified here: [________________________________].

The Loan Agreement, financing statement, or delivery of collateral paperwork does not by itself guarantee attachment, perfection, or priority. Schedule 3 must identify the debtor's location, collateral, governing perfection law, filing office, and any filing, possession, control, delivery, certificate-of-title, fixture, or other step.

9. Events of Default

An Event of Default occurs only upon a selected event below and expiration of its stated cure period:

• ☐ nonpayment of principal or interest when due; cure period: [____] days;
• ☐ material breach of a covenant in this Agreement; notice and cure period: [____] days;
• ☐ a materially false representation reasonably relied upon by Lender; cure if possible: [____] days;
• ☐ cross-default under this identified debt above this threshold: [________________________________];
• ☐ final unstayed judgment above this threshold for this period: [________________________________];
• ☐ unauthorized transfer or lien materially impairing identified collateral; cure period: [____] days; or
• ☐ another negotiated default: [________________________________].

An insolvency or bankruptcy event does not expand contractual remedies beyond what applicable law permits.

10. Remedies

After an Event of Default and any required cure period, Lender may accelerate the unpaid enforceable Obligations by written notice and pursue remedies available under the Loan Documents and applicable law.

For a secured Loan, collateral remedies are controlled by the separate security agreement and applicable law. This Agreement does not authorize entry onto property, peaceful-possession determinations, a creditor-selected proceeds order, or any other collateral remedy beyond those sources.

Lender may recover reasonable documented enforcement expenses, including attorney's fees, only if included in the agreed Loan Documents, permitted by law, and included in the lawful-rate analysis when required.

No automatic equitable relief, bond waiver, setoff against unidentified accounts, punitive-damages waiver, or presumed irreparable injury applies.

11. Risk Allocation

This Agreement contains no blanket Borrower indemnity for the existence of the Loan, no force-majeure excuse for Lender's funding duties, and no lender liability cap.

Any negotiated indemnity, damages exclusion, escrow, holdback, or liability allocation must be stated in Schedule 9, identify the covered claims and exclusions, and be reviewed together with nonwaivable duties and the interest-and-charge analysis.

12. Governing Law and Disputes

Alabama law governs the parties' contractual rights and duties. Applicable choice-of-law rules for collateral perfection and priority are not displaced by this clause.

Selected forum for counsel review: [________________________________].

This Agreement contains no arbitration clause or jury-trial waiver. Either provision must be separately negotiated after counsel reviews scope, forum, costs, remedies, provisional relief, and enforceability.

Each party bears its own attorney's fees and costs except for the enforcement-expense provision in Section 10 or another signed provision permitted by law.

13. General Terms

1. Amendments. An amendment must be in a signed writing identifying this Agreement and the term changed.
2. No implied waiver. A delay or single waiver does not waive another or later breach.
3. Assignment. Borrower may not assign its duties without Lender's written consent. Lender may assign only together with the related rights and subject to the restrictions in Schedule 10.
4. Notices. Notices must use Schedule 11.
5. Entire agreement. This Agreement, the Note, and the completed schedules and identified Loan Documents are the parties' agreement concerning the Loan.
6. Execution method. If counterparts or electronic signatures will be used, counsel should add execution language appropriate to the selected method.
7. Severability. An unenforceable provision will be severed only to the extent permitted by law; no court is directed to rewrite the interest rate or another material economic term.

14. Signatures

Schedule 1 — Advances and Commitment

[________________________________]

Schedule 2 — Guaranties and Other Loan Documents

[________________________________]

Schedule 3 — Collateral and Perfection Plan

Schedule 4 — Insurance

[________________________________]

Schedule 5 — Borrower Information and Authority

[________________________________]

Schedule 6 — Borrower Disclosures

[________________________________]

Schedule 7 — Financial Reports

[________________________________]

Schedule 8 — Covenants, Thresholds, and Defaults

[________________________________]

Schedule 9 — Negotiated Risk Allocation

[________________________________]

Schedule 10 — Assignment Restrictions

[________________________________]

Schedule 11 — Notices

Exhibit A — Promissory Note

[Attach the transaction-specific Note.]

Sources and References

• Alabama Legislature — Code of Alabama
• Alabama's current Article 9 text reflects Act 2023-492 amendments to the listed affected sections. Amendment screening found no later enacted change to the verified interest sections.